Financial reform is needed to adequately fund the 'just transition' in developing countries, according to one 'climate action' official.
To further the 'just transition,' German Climate Action Official Jennifer Morgan says a better job needs to be done with leveraging financial capital.
"Whether it be providing the financing for renewables [or] providing the fiscal space for dealing with some of the debt issues," Morgan says that 2024 has to be the year “we turn the tide.”
Last April 26, Prime Minister Justin Trudeau and Barbados Prime Minister Mia Mottley convened in New York to discuss mechanisms that distribute climate aid to poorer countries.
"Building a fair, equal, and peaceful future, with clean air and clean water for everyone, is at the heart of the United Nations Sustainable Development Goals and reflects the vision of the Global Citizen NOW summit," said Trudeau.
He announced $44.8 million to tackle marine and coastal ecosystem management in the Caribbean following the summit.
The World Economic Forum (WEF) said poorer countries like Barbados face significant risks from climate change, citing "more frequent and intense" hurricanes, rising sea levels, and coastal erosion.
"If countries cannot access the finance, they need at rates they can afford, the world will lose the battle, not simply the countries," added Mottley, who wants to revolutionize how the developing world receives climate aid.
Last October 18, Trudeau pledged $58.6 million to Caribbean Development Bank to fund renewable energy projects. Another $6 million went to the Caribbean Climate Smart Fund.
"Canada has been proud of its strong development cooperation in the Caribbean region which has been at its highest level in recent years, but we know there’s much more work to be done," he said.
Morgan reiterated at the 2024 WEF Summit that the financial world is "very fragmented."
"The financial institutions are not fit for purpose right now," she said, adding it costs Africa "eight-times as much" as Europe to fund 'green energy' projects.
According to the 2023 Financing for Sustainable Development Report, 52 low- and middle-income developing economies are either in debt distress or at high risk of debt distress, accounting for more than 40% of the world's poorest people.
Mottley claimed wealthier countries can borrow capital between 1% and 4% interest rates, while poorer countries face 14% interest rates because they are considered "riskier investments."
"We have to bring down the cost of capital," concurred Morgan, as the cost of doing business is exponentially more expensive in the developing world.
In July 2022, Mottley convened a high-level retreat in Bridgetown, the island nation's capital, which led to the Bridgetown Initiative— a call to action to address the "immediate financial needs" of climate change.
Mottley said it provides the groundwork for "needed reform" to "outdated" development banks, like the World Bank and International Monetary Fund.
According to WEF, the Bridgetown Initiative would provide funds — while suspending interest payments — to mitigate a debt crisis when nations rebuild after successive natural disasters.
The project is likened to the Marshall Plan of 1948, when the U.S. provided over $13 billion to help Western Europe rebuild after World War II.
The UN has since claimed progress on "multiple fronts" including an agreement to establish a loss and damage fund during the U.N. Climate Change Conference (COP27), with the terms agreed upon at COP28.
The island nation's leader told COP27 that November that Barbados could only fight ‘climate change’ with access to concessional funding.
Morgan claims developed countries and banks will be relied on to contribute "trillions of dollars" to make the 'just transition' a reality in the coming decades.
"Finally, this year, the OECD confirmed we met the $100 billion commitment," she said, "but we need the trillions."
The Barbados prime minister asked for $1 trillion to fund "climate resilience" in developing countries with climate-vulnerable countries."
According to WEF, the Global Climate Mitigation Trust could leverage $3-4 trillion in private funding for global economic and development policy.